Government's Cost of Living Tsar Issues Blunt Warning to Fuel Firms
The government's newly appointed cost of living champion has delivered a stark warning to energy companies, accusing some of engaging in "opportunistic rip-offs" as fuel prices surge amid the ongoing Middle East crisis. Lord Richard Walker, the boss of frozen food chain Iceland, called on regulators to take stringent action against any firms found exploiting consumers during this volatile period.
Downing Street Meeting to Address Profiteering Concerns
Chancellor Rachel Reeves and Energy Secretary Ed Miliband are scheduled to meet with industry leaders at Downing Street on Friday to emphasise that the government will "not tolerate" profiteering from rising oil prices. Lord Walker, who will also attend the meeting, wrote in a statement: "Some companies are taking the p!$$. Today, we're bringing the energy companies and fuel retailers into No10 to tell them that opportunistic rip-offs will not be tolerated." He further stressed the need to hold regulators accountable, ensuring they utilise all available measures to protect consumers.
Fuel Prices Skyrocket Amid Geopolitical Tensions
The nationwide average for unleaded petrol has climbed to 140.15p per litre, marking an increase of over 7p since before the conflict began. Diesel prices have risen even more sharply, surging nearly 16p a litre to 158.23p. This spike coincides with oil prices stabilising around $100 per barrel for the first time since August 2022, driven by intensified attacks on infrastructure and shipping in the Gulf by Iran.
Energy Secretary Ed Miliband did not dismiss the possibility of government intervention, such as direct support or extending the freeze on fuel duty if the conflict persists. He also criticised calls for Labour to dilute its net zero targets, asserting: "We've got to have clean, homegrown power that we control. That's the biggest long-term lesson of this crisis."
Broader Economic Impacts and Mortgage Rate Increases
The crisis has extended beyond fuel costs, with mortgage rates jumping due to fears that rising energy prices could fuel higher inflation. According to industry experts at Moneyfacts, the average cost of a new five-year fixed-rate mortgage has reached a near 12-month high of 5.19%, while the average two-year fix has increased to 5.10%. Compounding the issue for borrowers, the number of available fixed deals has plummeted by 530 since the conflict erupted.
The Bank of England is anticipated to maintain its base rate unchanged next week, a shift from earlier expectations of a cut prior to the crisis. Additionally, concerns are mounting that the energy shock could further slow the UK's fragile economy, potentially pushing it into recession. Data from the Office for National Statistics indicated zero growth in January, even before accounting for the war's impact.
Global Oil Market Disruption and Financial Windfalls
Oil prices are on track for a 10% weekly increase, despite the International Energy Agency's agreement to release a record 400 million barrels from reserves. The IEA warned that the conflict is causing the largest supply disruption in the history of the global oil market. Iran has escalated attacks on merchant ships in the critical Strait of Hormuz, with Tehran cautioning that oil could reach $200 per barrel.
Meanwhile, Russia is estimated to have earned up to £1.4 billion from soaring oil prices, with taxes on exports generating up to $150 million (£113 million) daily to fund its war in Ukraine. According to the Financial Times, Russia may have collected between $1.3 billion (almost £1 billion) and $1.9 billion (£1.4 billion) since the Middle East war erupted. In contrast, Gulf state oil producers have suffered billions in lost energy revenues since the conflict began.
